(Yicai Global) Nov. 26 -- Tongcheng Elong Holdings, a Chinese online travel agency backed by Ctrip and Tencent, surged 26.5 percent on its first day of trading in Hong Kong, valuing the company at more than HKD25.5 billion (USD3.26 billion).

The shares [HKG:0780] closed at HKD12.40 (USD1.59) each. The Jiangsu province-based company had priced the initial public offering at HKD9.80, near the low end of a marketed range.

Before listing, Tongcheng Elong was valued at about USD4.5 billion. The recent market downturn may have led to the lower asset consideration, an analyst said. Despite this, the company has great potential amid investor optimism about the tourism sector. It plans to develop business in hotels and scenic areas, and can draw on Tencent's mini programs.

Tongcheng Elong raised almost HKD1.3 billion (USD166 million) after deducting underwriting fees, commission and expenses, the company said in a statement. About a third of the funds will be used to strengthen products and services and boost its supplier and user base.

A similar amount will be used for potential acquisitions, investments, joint ventures and partnership opportunities that align with the company's strategy, while another third will go to improving technical strength. Operations and other general purposes will account for the remainder.

Tongcheng Elong received 7,500 valid applications for 39.1 million shares during the public subscription period, 2.7 times the 14.4 million shares in the IPO.

Editor：Bivash